Skim coating is the method of smoothing a rough wall by applying a layer of joint compound. Sheet rock installers use skim coating to cover the taping and other irregularities, and to ultimately get the smoothest possible surface for painting.
Often, two coats are needed in immediate succession for a perfectly smooth finish. The first coat provides a level finish, and second coat allows a little extra thickness so that the surface can be made smooth and polished.
Skim coating is the only way to achieve a Level 5 drywall finish, which is the top level recommended by the Painting and Decorating Contractors of America. The extreme smoothness is needed generally in areas where there is bright lighting.